Shares of Akebia Therapeutics (NASDAQ: AKBA) tumbled 20.77% in after-hours trading on Wednesday, following the company's announcement of a proposed public offering of common stock. The biopharmaceutical firm, which focuses on developing treatments for kidney disease, saw its stock price react sharply to the news of potential share dilution.

Akebia Therapeutics revealed that it has commenced an underwritten public offering of its common stock, with all shares being offered by the company. While the size and terms of the offering were not disclosed, Akebia stated its intention to grant the underwriters a 30-day option to purchase up to an additional 15% of the shares sold in the offering. Leerink Partners and Piper Sandler & Co. are acting as joint bookrunning managers for the offering.

The sudden stock price decline reflects investors' concerns about potential dilution of their ownership stakes. Public offerings typically increase the number of outstanding shares, which can lead to a decrease in earnings per share and stock value. However, the company likely aims to raise capital to fund its operations and advance its kidney disease-focused pipeline. As the offering is subject to market conditions, Akebia cautioned that there is no assurance as to whether or when the offering may be completed, or its actual size and terms.